Financial Results Presentation for the Third Quarter of FY2017...NitoriHoldingsCo.,Ltd.Holdings Co.,...

Nitori Holdings Co., Ltd.Nitori Holdings Co., Ltd.Financial Results Presentation

for the Third Quarter of FY2017

22 December 2017TSE1st.&Sapporo Code : 9843

22 December 2017【DISCLAIMER】

IN-HOUSE TRANSLATION

Overview of Consolidated Financial Results（Billions of Yen）

Q1-Q3 FY201721 F b 20 N 2017

Q1-Q3 FY201621 F b 20 N 2016

Change21 Feb-20 Nov 2017

(to sales)21 Feb-20 Nov 2016

(to sales) (YOY)

N t l 422 7 379 0 43 7 111 5％Net sales 422.7 － 379.0 － 43.7 111.5％

Gross profit 230 2 54 5% 207 1 54 7% 23 1 111 2％Gross profit 230.2 54.5% 207.1 54.7% 23.1 111.2％

SG&A expenses 159 8 37 8% 136 9 36 1% 22 9 116 7％SG&A expenses 159.8 37.8% 136.9 36.1% 22.9 116.7％

Operating income 70.4 16.7% 70.2 18.5% 0.2 100.3％Operating income 70.4 70.2 8 0.2

Ordinary income 71.5 16.9% 71.1 18.8% 0.4 100.5％y 71.5 71.1 0.4Profit attributable to 51 2 12 1% 47 5 12 6% 3 7 107 7％

Copyright 2017 Nitori Holdings All Rights Reserved ■不許複製印刷配布 22

attributable to owners of parent

51.2 12.1% 47.5 12.6% 3.7 107.7％

Consolidated Balance Sheets

20 Nov 2017

20 Feb2017 Change Major factors

on changes

（Billions of Yen）

Current assets 152.8 170.1 (17.3)(Cash and deposits) 48.5 70.5 (22.0)

(Inventory) 46.4 48.9 (2.5)

Non-Current assets 378.3 317.6 60.7(Property plant and equipment) 284 5 248 0 36 5 La d ＋34 5(Property, plant and equipment) 284.5 248.0 36.5 Land ＋34.5

(Investments and other assets) 79.3 55.8 23.5 Investment securities +23.3

Total assets 531 2 487 8 43 4Total assets 531.2 487.8 43.4

Current liabilities 73.5 75.7 (2.2) Income taxes payable (4.6)

(Accounts payable - trade) 18.2 16.0 2.2(Short-term loans payable) 2.0 0.6 1.4

Non-Current liabilities 25.4 17.3 8.1( l bl ) 8 0 8 0(Long-term loans payable) 8.0 - 8.0

Total liabilities 98.9 93.0 5.9

Total net assets 432.3 394.7 37.6 Net income +51.2


Total net assets 3 3 39 3 6

Total liabilities and net assets 531.2 487.8 43.4

3

Trend in YOY changes in comparable stores 【1Q-3Q】

（％）

107 3115

※Sales = Sales based on orders【Sales , YOY】

104.0 103.3 101.4

107.3102.4105

110

95

100 Q1-Q3 FY2017

Sales comp. by product Change

i 38 ％ 0（％）

90

115 No of Customers Average spent per customer

【No. of Customers・Average Spend per Customer , YOY】

Furniture 38.5％ ▲0.5ptHFa 61.5% +0.5pt

107.2 104.5 103 1

104.4 101 7105

110

115 No. of Customers Average spent per customer

100.9 98.9 99.7

103.1 101.7

100.1 97 995

100

105

98 9 97.9 90

95

Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3 Q1-Q3


Q1 Q3 FY2013

Q1 Q3 FY2014

Q1 Q3 FY2015

Q1 Q3 FY2016

Q1 Q3 FY2017

Product with strong salesOriginal mattress

N-sleepN sleepOffer various type of sleeping comfortability with expansioncomfortability with expansion in variety

Appeal the quality and the comfortability continually through TVCMthrough TVCM

Approx. 60% of sales volume ppof N-sleep are compressed-roll style⇒ Easy to take home⇒・Easy to take home

・Efficient shipment,improvement in stock


pstorage

5

Product with strong sales

Living storage

TV commercial shows a good co e c a s o s a goodcombination of furniture and basket

Basket sizes are modularized to fit perfectly into Nitoriʼst pe ect y to to sfurniture

C t ib t t th i iContributes to the increase in the number of customers since most customers purchasemost customers purchase repeatedly


Product with strong sales

Fall/Winter products

Fall/Winter products, mainly “N-warm” series, have shownN warm series, have shown strong sales because of the temperature drop

The sales of seasonal coordination series hascoordination series has exceeded that of the previous year

The sales of kotatsu-related products increased inproducts increased in consequence of suggestion coordination plans on TVCM and i t


in stores

7

Consolidated Sales


【Net sales】 Amount YOYStore sales(Global) ¥383.7bil. 110.2%Net salesE-commerce ¥22.0bil. 133.2%

B to B ¥2.8bil. 116.8%

Renovation sales ¥4 1bil 104 0%379 0

422.7 (111.5%）

Renovation sales ¥4.1bil. 104.0%

Rent income ¥5.2bil. 115.1%

Others ¥4.7bil. 140.0%

379.0

Total ¥422.7bil. 111.5%

Sales comp. by region

Hokkaido 4.7％ △0.3pt Kinki 15.2％ △0.4pt

Tohoku 5.6％ △0.5pt Chugoku&Shikoku 7.4％ △0.4pt&Shikoku

Kanto 31.3％ +1.2pt Kyusyu&Okinawa 8.6％ △0.4pt

Hokuriku&Koshinetsu

5.4％ △0.3pt EC 5.2％ +0.9pt

Chubu&Tokai 10.2％ △0.3pt Others 6.4％ +0.5pt

Copyright 2017 Nitori Holdings All Rights Reserved ■不許複製印刷配布 8Q1-Q3 FY2016 Q1-Q3 FY2017

8

Eastern 47.2% +0.0pt Western 41.2% △1.4pt

Nitori business(B to B)

Good sales to mainly offices and hotels


Interior Renovation Business8/21〜10/1

System Kitchen CampaignBy providing products with affordable price line (¥159 000 ) th l*(¥159,000 ), the sales steadily increased

*

The sales of system kitchen during the campaign was over 200% in comparison toover 200% in comparison to that of the previous year

O ti i d l bOperating income and labor productivity improved significantly by dividing the s g ca t y by d d g t ework between sales and construction and by

i i th t l


reviewing the past sales methods *before tax/ installation, assembly, delivery fee is not included

Gross profit ・ SG&A expenses

207.1230.2

【Gross profit】【SG&A】 Amount YOY Ratio to sales Change

Personnel ¥46.6bil. 110.6% 11.0% △0.1pt（111.2%）


207.1Rents ¥24.7bil. 121.2% 5.9% +0.5pt

Deliverycharge ¥19.9bil. 112.9% 4.7% ＋0.1pt

Advertising ¥11.7bil. 109.6% 2.8% △0.1Pt

Outsourcing ¥10.0bil. 130.2% 2.4% +0.3Pt

Store fixtures

Depreciation ¥8.2bil.Q1-Q3 FY2016 Q1-Q3 FY2017

Store fixtures expense ¥6.3bil. 296.8% 1.5% +0.9Pt

Capital investment ¥48.8bil.【Gross profit margin】54.7% 54.5%（△0.2pt）

+0.2pt +0.8pt p

△1.2pt COGS FX impact

applied to the purchase reductionpurchase

(¥105.59/$⇒¥105.07/$)

FX impact applied to the

inventory

Copyright 2017 Nitori Holdings All Rights Reserved ■不許複製印刷配布 1111Q1-Q3 FY2016 Q1-Q3 FY2017

No. of stores as of 20 Nov 2017Prefecture No. of

stores Prefecture No. of stores Prefecture No. of

stores

Hokkaido 20 (±0) Yamanashi 3 Shimane 2

H kk id 20 (±0) I hik 5 Hi hi 12５０９

Stores(+３８)

Hokkaido 20 (±0) Ishikawa 5 Hiroshima 12

Aomori 6 (±0) Toyama 4 Yamaguchi 5

Akita 4 Fukui 2 Kagawa 4

２７３９０

Iwate 3 Hokuriku & Koshinetsu 31 Tokushima 2

Yamagata 4 Shizuoka 12 (+1) Kochi 3

Miyagi 7 Aichi 25 (+1) Ehime 6(Taiwan)

２７（±０）

３９０(+17)

y g ( )

Fukushima 5 Mie 7 Chugoku & Shikoku 42

Tohoku 29 (±0) Gifu 10 (+3) Fukuoka 19 (+1)

T k 47 (+9) Ch b & T k i 54 (+5) Oit 5

８

Tokyo 47 (+9) Chubu & Tokai 54 (+5) Oita 5

Kanagawa 26 (+3) Osaka 31 (+3) Miyazaki 3

Saitama 28 (+4) Kyoto 12 (+1) Saga 3 (+1)５(USA)

８（+４）

Chiba 22 (+1) Nara 5 Nagasaki 3

Gunma 6 Hyogo 23 (+1) Kumamoto 6 (+1)

Tochigi 8 (±0) Shiga 7 Kagoshima 7 (+1)

５

６１１８

g ( ) g g ( )

Ibaraki 13 Wakayama 5 Okinawa 4

Kanto 150(+17) Kinki 83 (+5) Kyushu & Okinawa 50 (+4)

ii 8 i 2 459

DECO HOME (China)


６１(+10)

１８（+７）

12

Niigata 8 Tottori 2Japan 459

(+31)Nagano 9 Okayama 6

Store openings in Japan

Urban area Small population area

Deco Home


Deco Home Nitori Express

Store openings in ChinaFirst store openings in North & South China

Tianjin ShenzhenTianjin Shenzhen


Nitori China

Launch online furniture salesfurniture sales

Start of online furniture salesStart of online furniture sales through Nitori Chinaʼs own website

Providing after-sales service efficiently by limiting theefficiently by limiting the online sales area to that with real stores

Planning to expand on the online sales area by linkingonline sales area by linking with upcoming new store openings


Nitori China

Visionin 2022

200 stores200 stores

Construction of nationwide openConstruction of nationwide product collection and

supply system

ed

l


supply system plan

Major indicators of management efficiency（1）Scope

Number Indicator un

it Target 2017.11 2016.11 2015.11 2014.11 2013.11

1 Return on assets ％ Over 11 25％ ○ 14.0 16.2 13.6 15.0 15.41 ％ 11.25％ ○ 14.0 16.2 13.6 15.0 15.4

2 Total asset turnoverTi

mes

Over 1.5 × 0.83 0.86 0.80 0.87 0.93O di iG

rou

p

3 Ordinary income margin ％ Over 10％ ○ 16.9 18.8 16.9 17.3 16.5

4 Earnings per share ¥ Over ¥75 ○ 458.6 429.6 317.5 289.2 256.6p

︵Nin

5 Return on equity ％ Over 11.25% ○ 12.4 13.6 10.9 11.6 12.7

6 E it ti ％ O 60％ ○ 81 2 80 3 77 9 76 5 73 0e m

on

6 Equity ratio ％ Over 60％ ○ 81.2 80.3 77.9 76.5 73.0

7 Interest coverageTi

mes

Over 20 ○ 1,676 1,689 918 750 455nth

s

︶

8 Sales growth rate ％ Over 10％ ○ 11.5 13.2 7.8 9.5 11.2

9 Ordinary income th t ％ Over 10％ × 0 5 26.1 5.2 14.7 1.19 growth rate ％ Over 10％ × 0.5 26.1 5.2 14.7 1.1

10 Ratio of gross profit to sales ％ Over 48％ ○ 54.5 54.7 52.8 52.2 52.3R ti f b k


11 Ratio of break-even point to sales ％ Under 80％ ○ 65.4 61.8 64.2 63.1 64.7

17

Major indicators of management efficiency (2)Scope

Number Indicator un

it Target 2017.11 2016.11 2015.11 2014.11 2013.11

12 Sales per tsubo K Over ¥950K ○ 1,011 980 922 918 888

Sa

le

○ 1,011 980 9 9 8 888

13 Stock turnoverTi

mes

Over 9 × 5.9 5.8 5.4 5.7 6.0

14 Operating assets Ti ○ 3 9 3 9 3 9 4 1 4 2

e o

f fur

n

14 Operating assets turnover me

sOver 2.9 ○ 3.9 3.9 3.9 4.1 4.2

15 Ratio of profit distribution ％ Over 20％ ○ 31.0 34.2 31.0 32.3 31.7

nitu

re

a

16 Ratio of real estate cost to gross profit ％ Under 25％ ○ 22.0 20.6 22.1 22.0 22.5

17 Ratio of sales promotion cost to gross profit ％ Under ６％ ○ 5.7 5.8 6.2 6.2 6.2a

nd

ho

m

cost to gross profit

18 Labor productivity M Over ¥10M ○ 18.30 19.25 18.03 18.55 19.04Ts

34 2 37 0 38 3 39 8 42 4e fu

rn

is

19 Sales floor per labor ubo

Over 60 × 34.2 37.0 38.3 39.8 42.4

20 Operating income per tsubo K Over 150K ○ 155 167 135 139 132s

hin

g 21 Stock per tsubo K Under 90K ○ 78 77 81 77 7122 Average age of labor 30〜35 ○ 33.1 33.2 33.0 32.6 32.3


22 g g ○ 33.1 33.2 33.0 32.6 32.3Results （○won/×lost） ○18×4 ○19×3 ○13×9 ○15×7 ○15×7

18

TOPICS

LogisticsDevanning assist machine

EL-De/VANUnattended/intelligent transport

robotic system

Butler EL De/VANButler

Joint development with Murata Machinery Ltd By using a

Launched for the first time in Machinery, Ltd. By using a conveyor with vertical and horizontal head swing function and

ifi k b h it ll f

Japan, Butler brings product storage shelves to workers. AI empowered robots significantly


a specific work bench, it allows for easy unloading.

p g yimproved the working efficiency.

20

Human resource development

Nitori US seminarNitoriʼs the most investment in education.

Participants experience “prosperous home living”prosperous home living firsthand, and share Nitoriʼsmission and vision.

Expanded the educational opportunity for nationalopportunity for national staffs by holding the seminar in Chinese for the first time.

1,097 Participants in 2017(from Nitori group)


2017(from Nitori group)

Future Measures

2022【Change in business environment】l b li i ¥1 tril.

in net sales・Globalization・Expansion of business areaChange in products comp in net sales

1,000 stores・Change in products comp.

【Change in external environment】・Competition with different

【F t 】

industries・Advancement in technologyP bl i l i ti d 【Future measures】

・new core system・Problems in logistics andemployment

y・new logistics systemO2O


・O2O(Online to Offline)

Store roll-out plan in FY 2017

StoreTaiwan USA China

TotalTaiwan USA China

End of Q3 ３９８６１２７５１８５０９Q3Q4Net ＋６＋２ ±０ ±０＋６＋１４

increase ＋６＋２ ±０ ±０＋６＋１４

End of ４０４６３２７５２４５２３FY2017 ４０４６３２７５２４５２３

ChiChina＋６

USA±０

Japan＋８

Taiwan±０


＋８±０23

Plan in FY 2017

FY2017 Plan FY2016 Change（Billions of Yen）

(to sales) (to sales) (YOY)

Net sales 568.0 － 512.9 － 55.1 110.7%

Gross profit 309.0 54.4% 278.2 54.2% 30.8 111.0%

SG&A expenses 210.0 37.0% 192.5 37.5% 17.5 109.1%

Operating 99 0 17 4% 85 7 16 7% 13 3 115 4%p gincome 99.0 17.4% 85.7 16.7% 13.3 115.4%

Ordinary 100 0 17 6% 87 5 17 1% 12 5 114 2%income 100.0 17.6% 87.5 17.1% 12.5 114.2%

Profit attributable t f 68 5 12 1% 59 9 11 7% 8 6 114 2%to owners of parent

68.5 12.1% 59.9 11.7% 8.6 114.2%


No change of plan

【DISCLAIMER】Th f d j d i l i d i hi b d i f iThe forecasts and projected operating results contained in this report are based on information available at the time of preparation, and thus involve inherent risks and uncertainties.Accordingly, readers are cautioned that actual results may differ materially from those projected as a result of a variety of factors.

Financial Results Presentation for the Third Quarter of FY2017...NitoriHoldingsCo.,Ltd.Holdings Co.,...

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